Moody's downgrade justifies cuts: Qld govt

The New York-headquartered agency on Monday downgraded Queensland's ratings outlook from stable to negative only two months after 14,000 public servants were made redundant.

Queensland keeps its AA1 rating, but the latest appraisal will make it harder for the state to regain the prized AAA rating it lost in 2009.

Moody's says the state's finances have deteriorated since the 2007/08 financial year and have worsened as infrastructure costs have continued to escalate in Queensland's southeast corner and mining-rich north.

"These pressures were exacerbated by a lack of expenditure discipline as spending continued to outpace revenues and by the impact of severe floods in 2011," it said.

Treasurer Tim Nicholls said the changed outlook from Moody's justified the austere budget unveiled in September.

"Moody's recognises the value of the Newman government's most important budget in a generation that starts the job of repairing Queensland's finances," he said in a statement.